Dubai and Malaysia ink fintech cooperation agreement
The Dubai Financial Services Authority (DFSA) and Securities Commission Malaysia (SC) last week entered into an agreement to cooperate in the development of financial technology (FinTech) innovation.
The agreement reflects efforts by both authorities to provide a robust regime that fosters innovation in the Dubai International Financial Centre (DIFC) and Malaysia.
The agreement was signed by Mr Ian Johnston, Chief Executive of the DFSA, and Tan Sri Ranjit Ajit Singh, Chairman of the SC. Under the terms, the authorities will share information on developments and innovations in FinTech, and intend to consider participating in joint innovation projects on the application of novel approaches to FinTech in each market. Given the significance of Islamic finance in both Malaysia and Dubai, FinTech developments in that sector will be of particular interest.
The agreement also provides a framework for cooperation and referrals between the innovation functions of each authority. The framework sets out a referral mechanism, which will enable the authorities to refer Innovator Businesses between their respective Innovation Functions and to provide the businesses with regulatory guidance.
Mr Johnston said: “Our FinTech regime is developed to enhance and improve access to finance and the efficiency of markets. We also want to encourage innovative financial services and solutions. By collaborating with the SC, we will further strengthen our FinTech proposition across traditional and Islamic finance markets.”
The DFSA and SC have a long-standing relationship to support developments in each other’s markets. In 2007, the authorities signed a mutual recognition agreement related to cross-border distribution and marketing of Islamic funds between Malaysia and the DIFC. It followed a 2006 joint initiative on regulatory alignment to facilitate Islamic finance transactions between the DIFC and Malaysia.
The latest cooperation agreement forms part of the DFSA’s innovation strategy, which complements the National Innovation Strategy, as set out by UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, to make the UAE a global hub for innovation. In August, the DFSA became the first regulator to launch a tailored regime for loan and investment crowdfunding platforms in the GCC. In May, the DFSA launched its Innovation Testing Licence, a special class of financial services licence that allows FinTech firms to develop and test innovative FinTech concepts from the DIFC.
The DFSA’s initiatives follows the launch of the FinTech Hive at the DIFC, bringing together the next generation of leaders and entrepreneurs to compete and address the growing needs of the region’s financial services industry, using innovative technology solutions. Its aim is to catalyse growth and efficiency in a variety of areas including trade finance, alternative finance and Shariah-based services.
In May, the SC introduced a framework to facilitate digital investment services. This follows the 2015 launch of the ‘alliance of FinTech community’ initiative in to engage with the tech entrepreneur community on innovative digital finance business models and technology related regulatory and policy matters.